Page 34 - UKRRptJune18

5.2 Balance of payments, current account
Ukraine's current account balance switched to a surplus of $175mn in April following a $628mn deficit in March, according to the National Bank of Ukraine (NBU).
The result was attributed to a lower trade deficit and a surplus in secondary income. The current account deficit slid 3.3% year-on-year in April, bringing the January-April result to a minor deficit of $202mn (vs. a $176mn deficit in January-April 2017).
Due to lower imports of goods, the trade deficit declined to $385mn from $597mn in March. Meanwhile, the primary income balance switched to a $308mn surplus from a deficit of $369mn in the previous month mostly due to lower payments on state debt servicing.
Merchandise trade swelled in April as goods exports jumped 19.6% y/y. The lion’s share of export growth occurred with metals, which surged 65.8% y/y to $1bn, posting the highest result since August 2014. Another important contributor was food exports, which increased 8.1% y/y after a 16.2% y/y decline in March. Meanwhile, the decline in mineral product exports accelerated to 13.1% y/y.
Merchandise imports accelerated to 18.1% y/y growth from 1.2% y/y in March owing to machinery (36.2% y/y), chemicals (14.8% y/y) and food (24.6% y/y).
"Goods exports picked up in April in accordance with our expectations, however the jump in metal export sales came as a very good surprise," Evgeniya Akhtyrko at Kyiv-based brokerage Concorde Capital wrote in a research note on May 31.
Concorde forecasts the trade deficit to swell $10.8bn through the end of the year, assuming an almost even growth pace between exports (11.3% y/y in 2018) and imports (11.5% y/y in 2018).
The brokerage believes the current account deficit will reach $2.4bn (vs. a $2.1bn deficit in 2017) in late 2018.
5.2.1 Import/export dynamics
Europe becomes Ukraine's main trading partner . Exports of goods from Ukraine to European countries grew by 31% in 2017, to $14.4bn, and their volumes exceeded the level of the pre-crisis year 2013, the analytical publication "Irregular Research" writes, as reported by the National Bank of Ukraine’s (NBU) press service. "In 2017, Ukraine's economic relations with Europe substantially strengthened, largely due to exports....and its volume exceeded the level of the pre-crisis year 2013. Europe's share in exports reached 36%, and was the highest since 2004," the report says.
Exports of grain since the beginning of the 2017/2018 agricultural year (July-June) and as of May 30 amounted to 36.552mn tonnes, which is
34 UKRAINE Country Report June 2018 www.intellinews.com